The Civil Code of the Russian Federation and Internationalagreements

The Civil Code of the Russian Federation and InternationalAgreements

Mikhail G. Rozenberg"

This article describes the nature, status, and op- Cet article d6crit la nature, le statut et eration of international agreements under the aegis of l'application des accords internationaux sous l'6gide the laws of Russia in general, and under the Civil Code des lois de Russie en gcn6ral et du Code civil de la Fd- of the Russian Federation in particular. Attention is ddration russe en particulier. L'auteur porte particuli6- given to the means of enforcement of international rement attention aux moyens d'execution des accords agreements, their sphere of application, and their inter- intemationaux, a leur sph&e d'application, ainsi qu'.1 action with domestic legislation. In terms of this inter- l'interaction qu'ils ont avec la 16gislation domestique. action, the author considers the operation of domestic Quant A cette interaction, 'auteur contemple Russian legislation in the absence of international l'application de la 16gislation domestique en ]'absence agreements, the relative priority in Russia of rules in d'accords internationaux, l'importance relative, en international agreements, and the relative authority of Russie, des rgles 6labores dans les accords intema- the rules in international agreements as well as in the tionaux, ainsi que l'autorit6 relative des rigles 6labo- domestic legislation of the Russian Federation. r6es dans les accords intemationaux et dans la lhgisla- tion domestique de la F~d~ration russe.

Professor of Law, Russian Academy of Foreign Trade (Moscow). © McGill Law Journal 1999 Revue de droit de McGill 1999 To be cited as: (1999) 44 McGill L.J. 473 Mode de rf~rence: (1999) 44 R.D. McGill 473 MCGILL LAW JOURNAL / REVUE DE DROITDE MCGILL [Vol.44

I. Definition of an International Agreement in Russian Law

If. Machinery for the Enforcement of International Agreements in the Russian Federation

Ill. Sphere of Application of International Agreements A. Purely International Relations B. International and Domestic Relations IV. International Agreements and Private International Law

V Application of the Civil Code of the Russian Federationin Lieu of an International Agreement and as a Subsidiary Statute

VI. Priority of Rules in International Agreements

VII. Autonomous Nature of International Agreements Within the Rus- sian Federation's Legal System and Enforcement Practices VIII. Correlation of International Agreements

IX. Reflection in the Civil Legislation of the Russian Federation of Provisions Sealed in International Agreements

Conclusion

References 1999] M.G. ROZENBERG - THE C.C.R.F & INTERNATIONAL AGREEMENTS 475

!. Definition of an International Agreement in Russian Law The term "international agreement of the Russian Federation" is defined as an international agreement in writing entered into by the Russian Federation with one or more foreign countries, or with an international organization. Such an agreement is regulated by international law, regardless of whether it is contained in one document or in several related documents. This definition follows the Vienna Convention on the Law of Treaties,' and the Vienna Convention on the Law of Treaties Between States and InternationalOrganizations or Between InternationalOrganizations!

The Russian Federation's international agreements are concluded with foreign countries as well as with international organizations on behalf of the Russian Federa- tion (inter-state agreements), the Government of the Russian Federation (inter- governmental agreements), and federal executive authorities (inter-departmental agreements). The Russian Federation is party to a substantial number of international agreements governing civil law relations. These include, inter alia, agreements on contracts for the international sale and carriage of goods,' as well as agreements on intellectual and industrial property." The U.S.S.R. and the Russian Federation took part in the development of a number of other international agreements which have yet to be ratified by the Russian Federation

'23 May 1969, 1155 U.N.T.S. 331. 221 March 1986, 25 I.L.M. 543. This treaty has yet to be ratified by the Russian Federation. ' See e.g. the United Nations Convention on Contractsfor the InternationalSale of Goods, 11 April 1980, 1489 U.N.T.S. 3 [hereinafter 1980 Vienna Convention]; the Convention Providing a Uniform Lawfor Bills of Exchange and Promissory Notes, 7 June 1930, 143 L.N.T.S. 257 [hereinafter 1930 Geneva Convention]; the Convention on the Contractfor the InternationalCarriage of Goods by Road, 19 May 1956, 399 U.N.T.S. 189; and the Conventionfor the Unification of Certain Rules Re- lating to InternationalCarriage by Air, 12 October 1929,261 U.N.T.S. 423 [hereinafter 1929 Warsaw Convention]. 4 See e.g. the Paris Convention for the Protection of Industrial Property, 20 March 1883, 74 U.K.F.S. 44 [hereinafter 1883 Paris Convention]; the Universal Copyright Convention, 6 September 1952, 216 U.N.T.S. 132; the Berne Conventionfor the Protection of Literary and Artistic Works, 24 July 1971, 1161 U.N.T.S. 3 (as revised in 1971) [hereinafter 1971 Berne Convention]; the Convention for the Protection of Producers of Phonograms against Unauthorized Duplication of Their Phono- grams, 29 October 1971, 866 U.N.T.S. 67 [hereinafter 1971 Geneva Convention] and the Madrid Agreement Concerning the InternationalRegistration of Trademarks, 14 July 1967, 828 U.N.T.S. 389 (as revised in 1971). - These include, for instance, the Convention on the Limitation Period in the InternationalSale of Goods, 14 June 1974, 1511 U.N.T.S. 3 [hereinafter 1974 New York Convention]; the United Nations Convention on International Bills of Exchange and International Promissory Notes, 9 December 1988, 28 I.L.M. 170 [hereinafter 1988 New York Convention]; the United Nations Convention on In- dependent Guarantees and Stand-by Letters of Credit, UN GAOR, 50th Sess., UN Doc. A/50/640 (1987) [hereinafter 1987 Guarantees];the UNIDROIT Convention on InternationalFinancial Leas- ing, 28 May 1988, 27 I.L.M. 931 [hereinafter 1988 FinancialLeasing]; the UNIDROIT Convention on InternationalFactoring, 28 May 1988, 27 I.L.M. 943 [hereinafter 1988 Factoring];and the Con- MCGILL LAW JOURNAL / REVUE DE DROIT DE MCGILL [Vol.44

II. Machinery for the Enforcement of International Agreements in the Russian Federation Pursuant to article 7(2) of the Civil Code of the Russian Federation,'international agreements concluded by the Russian Federation apply directly to civil law relations-except where the agreement requires the issuance of a domestic act in order to apply. When such a domestic act is published, it applies concurrently with the international agreement it has been adopted to implement. One example of the direct application of an international agreement to civil law relations is the 1980 Vienna Con- vention.' In contrast, arrangements relating to bills of exchange and promissory notes in the territory of the Russian Federation are regulated by federal laws, which were brought into force in the U.S.S.R. in accordance with the 1930 Geneva Convention' provisions concerning uniform laws for bills of exchange and promissory notes. Some international agreements expressly stipulate the issuance of domestic state acts on specific matters. Articles 10 and 11 of the 1883 Paris Convention,' for example, do just that. The Russian Federation can temporarily apply an international agreement-in full or in part-before the agreement goes into force if this is envisaged by the agreement or if it has been agreed upon by its signatories. A decision to enact such provisional enforcement is made by the same authorities in the Russian Federation who decided to sign the international agreement. Due to this, there appear to be no grounds for the occasionally recurring view that judicial authorities in the Russian Federation may, when resolving disputes, invoke ineffective international agreements as representing international custom. Those international agreements that have taken effect in the Russian Federation and whose binding nature has been recognized in federal laws are subject to official publication in the collections of Russian national legislation. As with other international agreements-with the exception of inter-departmental accords-they are also published in the Russian-language "Bulletin of International Agreements." Inter- departmental international agreements, for their part, are published in official periodi- cals of the executive authorities in whose name they were concluded. Article 15(3) of the Constitution of the Russian Federationdecrees that no regulatory legal acts affecting any rights, freedoms, and duties of individuals and citizens may apply unless officially published for general knowledge. Resolution No. 8 of the

vention on the Law Applicable to Contractsfor the InternationalSale of Goods, 30 October 1986, 24 I.L.M. 1573 [hereinafter 1986 Geneva Convention]. 6Part 1 was enacted in 1994: Sobranie zakonodatelstva R.E (1994) No. 32, item 3301; and Part 2 was enacted in 1995: Sobranie zakonodatelstva R.E (1996) No. 5, item 410 [hereinafter C.C.R.R]. For the English-language translation, see RB. Maggs & A.N. Zhiltsov, eds., The Civil Code of the Russian Federation,trans. RB. Maggs & A.N. Zhiltsov (Armonk, N.Y.: M.E. Sharpe, 1997). 'Supra note 3. 'Ibid. 9Supra note 4. 1999] M.G. ROZENBERG- THE C.C.R.F & INTERNATIONAL AGREEMENTS 477

Plenum of the Supreme Court of the Russian Federation expressly stipulates that under this constitutional provision, a court may not base its judgment on any unpub- lished regulations affecting rights, freedoms, and duties of individuals and citizens. It seems likely that this constitutional provision also extends to international agreements to which the Russian Federation is a party.

Ill. Sphere of Application of International Agreements Depending on their spheres of application, international agreements fall into one of two groups: (i) agreements regulating purely international relations, and (ii) agreements regulating international and domestic relations.

A. Purely International Relations The first type of agreement regulates international relations alone (i.e., relations which involve partners from different countries). Examples of such agreements include the 1980 Ienna Convention, the 1974 New York Convention," and the 1988 New York Convention." Concluding such agreements is one way to establish uniform arrangements to regulate international markets. However, this does not result in any modification to the rules governing domestic relations; it simply leaves open the possibility that any country that is party to such an agreement may use provisions in the agreement to amend its own civil legislation regulating relations inside the country.

B. International and Domestic Relations The second type of international agreement regulates relations both in the international and domestic arena. These agreements are designed for the unification of rules concerning specific issues. One example of such an international agreement is the 1930 Geneva Convention. While providing for the enactment of uniform laws within the territories of contracting nations, it allows certain departures from such law, in particular when it comes to regulating domestic markets. Russia took advantage of this right and adopted a national law in March 1997 that has given force to the regulations relating to bills of exchange and promissory notes. Included in this second category are international agreements that force their member countries to make appropriate changes to domestic laws applicable to relations with and without foreign involvement. One example is the 1971 Berne Conven- tion."

"Supra note 5. "IbidL '2 Supra note 4. MCGILL LAW JOURNAL / REVUE DE DROITDE MCGILL [Vol. 44

IV. International Agreements and Private International Law By virtue of article 15(4) of the Constitutionof the Russian Federationand article 7(1) C.C.R.F., Russia's international agreements form part and parcel of its legal system. These statutory provisions require clarity in determining the operating sphere of a given international agreement. The scope of operation may be defined by appropriate prescriptions set forth in the agreement, or by deference to Russian legislation pursuant to either an understanding between the parties or a rule governing the choice of laws (i.e., a domestic rule of private international law). In practice, Russian authorities-in particular, members of the International Commercial Arbitration Court ("I.C.A.C.") under the Chamber of Commerce and Industry of the Russian Federa- tion-proceed under the premise that the sphere of application of an international agreement is determined by the agreement's own precepts. Where an international agreement establishes uniform norms of substantive law which are applicable to specific relations, generally no conflicts of law arise. Thus, there is no need to identify the applicable national law in order to regulate relations made more complex by foreign involvement. Nevertheless, in the absence of any indications in an international agreement that would make it possible to apply the agreement to regulate relations arising under a civil law contract-where Russian law is applicable by virtue of an understanding reached between the parties or a rule governing the choice of law-the rules of the international agreement should apply as prescriptions that are part of the Russian Federation's legal system. The agreement's sphere of operation, however, must encompass the regulation of the corresponding relations. The practical significance of following one or the other approach is forcefully manifested in the following example. Russia has been a party to the 1980 Vienna Convention since September 1, 1991" and, as of February 1, 1998, it is in effect in forty-eight countries. According to article 1 of the 1980 Vienna Convention, this treaty applies to international contracts of sale of goods between parties whose commercial enterprises (i.e., principal places of business) are in different countries when (i) the countries are Contracting States (i.e., parties to the 1980 Vienna Convention), or when (ii) the rules of private international law lead to the application of the law of a Con- tracting State. However, article 566 of the 1964 Civil Code of the Russian Soviet Fed- erated Socialist Republic" governing choice of laws which was effective until August 3, 1992 stipulated that the rights and obligations of parties under a foreign trade transaction were defined by the law of the place where the transaction was executed, unless otherwise agreed upon by the parties. A similar precept is set out in the agreement of countries grouped in the Commonwealth of Independent States ("C.I.S."), On the Procedurefor the Resolution of Disputes Pertaining to Economic Activities, con-

" The respective act of accession was approved by the U.S.S.R. Supreme Soviet on May 23, 1990. The Russian Federation has continued to participate in the 1980 Vienna Convention as successor to the U.S.S.R. from December 24, 1991. " Vedomnosti S"ezda Narodnykh Deputatov R.E i Verkhovnogo Soveta R.E (1964) No. 24, item 406 [hereinafter 1964 Civil Code]. 1999] M.G. ROZENBERG- THE C.C.R.F & INTERNATIONAL AGREEMENTS 479 cluded on March 20, 1992," and in the Convention on Legal Assistance and Legal Relations in Civil, Family, and Criminal Cases, concluded among C.I.S. countries on January 22, 1993." If the rules governing the choice of laws as established by the 1964 Civil Code, the 1992 Procedure,and the 1993 Legal Assistance were invoked without taking into account the relevant provisions of the 1980 Vienna Convention, then the domestic legislation of the corresponding foreign jurisdiction, not the 1980 Vienna Convention, would be the governing law in certain cases contrary to the clearly expressed wishes of the Russian Federation. For example, relations arising under an agreement concluded on July 1, 1992 during an international exhibition in Britain between a Russian and Canadian organization for the supply of goods from Russia would have been subject to English law rather than to the 1980 Vienna Convention-to which both Russia and Canada'7 are parties-simply because Britain is not a signatory to the 1980 Vienna Convention. Similar problems would also arise should provisions on conflict of laws call for the application to an agreement of a national law which is the most closely related to the agreement. A court would thus be in a position to apply the national law of a country not participating in the 1980 Vienna Convention, although the contracting parties are signatories to the convention. The provisions contained in the 1986 Geneva Convention" are particularly relevant here even though this Convention itself has not yet come into force. First, article 23 of the 1986 Geneva Convention expressly stipulates that it does not interfere with the application of the 1980 Vienna Convention, or the 1974 New York Convention. Second, according to article 8(5), the 1986 Geneva Convention prefers the domestic law of the State where a contract is concluded over the law of 1980 Vienna Convention member states where the contracting parties are based. It should be noted that the draft section on "Private International Law" in Part 3 of the C.C.R.F." directly points to an international agreement as a source for determining the governing law applicable to relations with foreign involvement.

V. Application of the Civil Code of the Russian Federation in Lieu of an International Agreement and as a Subsidiary Statute The general rule is that provisions in an international agreement itself determine the possibility of applying C.C.R.F. provisions instead of those formulated in the international agreement, or of applying the C.C.R.F. as a subsidiary statute where the

"Hereinafter 1992 Procedure. 16 Hereinafter 1993 Legal Assistance. "Canada has been a party to the 1980 Vienna Convention since May 1, 1992. "Supra note 5. 9Part 3 of the C.C.R.F. is not yet in force. MCGILL LAW JOURNAL / REVUE DE DROIT DE MCGILL [Vol. 44 international agreement features gaps and where Russian legislation is the governing law. In relation to the 1980 Vienna Convention, if an international contract of sale falls under its sphere of operation, the application of national civil legislation is permitted in the following cases: first, where the parties excluded the application of the 1980 Vi- enna Convention in full or in part or derogated from any of its provisions, then according to article 6 of the 1980 Vienna Convention national civil legislation will be permitted. Second, where matters governed by the 1980 Vienna Convention are not expressly settled and cannot be settled in conformity with the general principles on which the 1980 Vienna Convention is based, then these matters are subject to applicable Russian civil legislation under article 7(2) of the 1980 Vienna Convention. One should keep in mind the fundamental differences manifested in approaches to identifying the sphere of application of the 1980 Vienna Convention and those rules set forth in the C.C.R.F. which govern the sale of goods. As noted above, the parties to the contract must have their commercial enterprises located in different countries for the 1980 Vienna Convention to apply. It follows from this that a contract concluded by subjects of different countries whose commercial enterprises are located in the same country is not recognized-within the meaning of the 1980 Vienna Convention-as an international contract of sale. Therefore, the contract would not be subject to the provisions of the 1980 Vienna Convention. Such a contract, if falling under Russian law, is governed by provisions set forth in the C.C.R.F. The 1980 Vienna Convention's application is expressly ruled out in article 2 with respect to specific goods, namely, ships, vessels, hovercraft or aircraft, electricity, and securities. At the same time, transactions involving such goods are either clearly subject to the C.C.R.. or, as stipulated by the provisions on securities in article 454(2) C.C.R.F., are to be governed by general regulations on the sale of goods. This would be the case unless special rules are in effect for their sale. The 1980 Vienna Convention also does not apply to goods bought for personal, family, or household use unless the seller-at no time before or at the conclusion of the contract--either knew or ought to have known that the goods were bought for any such use. Nor does it apply to sales by auction (on execution) or otherwise by the authority of law according to article 2. The 1980 Vienna Convention only governs the formation of a contract of sale and the rights and obligations of the seller and the buyer arising from such a contract. In particular, it is not concerned with the validity of such a contract, its provisions or us- age, or with the effect the contract may have on the goods sold." Moreover, under the 1980 Vienna Convention, the seller is not liable for death or personal injury caused by the goods to any person.'

'01980 Vienna Convention, art. 4. 21 Ibid., art. 5. 1999] M.G. ROZENBERG- THE C.C.R.F & INTERNATIONAL AGREEMENTS 481

Regarding mixed contracts (Le., providing for the provision of services), the 1980 Vienna Convention stipulates that it is not applicable to contracts in which the prepon- derant part of the obligations of the party who furnishes the goods consists in the supply of labour or other services.22 Meanwhile, the C.C.R.F. stipulates that the rules on contracts whose elements are contained in a mixed contract apply to the appropriate arrangement between the parties under the mixed contract, unless something otherwise follows from the parties' agreement or from the substance of the mixed contract.' This means that where a mixed contract featuring elements of an international contract of sale does not fall under the 1980 Vienna Convention, it becomes subject to the C.C.R.F. The I.C.A.C. has made extensive practical use of Russian civil legislation (in- cluding the C.C.R.F.) as a subsidiary statute in settling disputes that are regulated by the 1980 Vienna Convention. This is because the 1980 Vienna Convention generally fails to provide-or provides only partial regulation for--certain issues which cannot be settled even by applying its general principles. One example is the enforcement of a contractual term through the imposition of fines. The 1980 Vienna Convention generally makes no mention of fines and their correlation to losses. Another example is the determination of the amount of default interest and a procedure for its calculation where the performance of pecuniary obligations is delayed beyond established dead- lines. While granting the right to draw such interest under article 78, the 1980 Vienna Convention does not specify either the rate or computation procedure. Further issues, such as the validity of a contract or its individual terms, as well as the related issues regarding the observance of Russian legislative requirements for the form of foreign economic contracts, the legal capacity of Russian and foreign legal entities, represen- tation, powers of attorney, and the invocation of a limitation period, are all subjects on which the 1980 Vienna Convention is silent. The C.C.R.F. was applied as the principal statute during the resolution of some disputes on the grounds that the parties' agreement, with respect to the application of Russian legislation, was interpreted as excluding the application of the 1980 Vienna Convention. At the same time, in other arbitration awards the I.C.A.C. reasoned that the contracting parties' decision to apply the law of a country participating in the 1980 Vienna Convention does not, as a general rule, exclude the application of the 1980 Vi- enna Convention's provisions.

VI. Priority of Rules in International Agreements The Constitution of the Russian Federationand the C.C.R.F. establish the relative priority of rules in international agreements. The legislation expressly states that if an international agreement in which the Russian Federation is a party establishes rules that differ from those prescribed by Russian law, the rules of the international agree-

2 Ibid., art. 3. Art. 421(3) C.C.R.F. MCGILL LAW JOURNAL / REVUE DE DROITDE MCGILL [Vol. 44 ment shall prevail.2- The same approach was taken by earlier legislation.' The I.C.A.C. has invariably proceeded from the same principle. For example, when the Council for Mutual Economic Assistance's General Terms of Supply were used as an international regulatory agreement, the limitation period and the procedure for its calculation were determined based on this document rather than on any national law." Such court decisions provide a vivid illustration of the acknowledged supremacy of international rules. Where the seller undertakes to refund the price of goods to the buyer, the I.C.A.C. binds the seller to pay the interest accruing on the price, and in so doing is guided by article 84 of the 1980 Vienna Convention rather than by article 487(4) C.C.R.F. Under the 1980 Vienna Convention, the interest is payable from the date on which the price was originally paid by the buyer. Under the C.C.R.F, it is payable from the day when the goods should have been delivered to the buyer-or when the amount earlier paid by the buyer is refunded to him-unless the contract binds the seller to pay interest on the prepaid amount from the day on which he receives such prepayment from the buyer. In keeping with the Constitution of the Russian Federation and with article 7(1) C.C.R.E, generally recognized principles and standards of international law form part of the Russian Federation's legal system. At the same time, both the Constitution and article 7(2) C.C.R.F formulate the rule on supremacy only with respect to intema- tional agreements." The arrangement for applying generally recognized principles and standards of international law to civil law relations is not defined by law. The issue remains largely unelaborated. Resolution No. 8 of the Plenum of the Supreme Court of the Russian Federation lists the Universal Declaration of Human Rights,' the International Covenant on Civil and PoliticalRights," and the InternationalCovenant on Economic, Social and Cultural Rights' as examples of international agreements which have institutionalized generally recognized principles and standards of international law.

24See Constitution of the Russian Federation,art. 15(4); and art. 7(2)(ii) C.C.R.F 'Fundamentals of Civil Legislation of the U.S.S.R. and Union Republics, Vedomosti S"ezda Narodnykh Deputatov S.S.S.R. i Verkhovnogo Soveta S.S.S.R. (1991) No. 26, item 733, art. 170 [hereinafter Fundamentals]. 26Art. 80 of the 1964 Civil Code; and art. 198 C.C.R.F. 27Supra note 24. 23GA Res. 217(111), UN GAOR, 3d Sess., Supp. No. 13, UN Doc. A/810 (1948) 71. 19 December 1966,999 U.N.T.S. 171. 19 December 1966,993 U.N.T.S. 3. 1999] M.G. ROZENBERG - THE C.C.R.F & INTERNATIONAL AGREEMENTS 483

VII. Autonomous Nature of International Agreements Within the Russian Federation's Legal System and Enforcement Practices The prevalence of rules in an international agreement concerning domestic statutory precepts should be kept in mind both during the application of provisions of the international agreement and during the subsidiary enforcement of domestic legal requirements. Article 7 of the 1980 Vienna Convention states that, in its interpretation, regard is to be made to its international character and to the need to promote uniformity in its application. Similar principles are laid down in a number of other international agreements.' It seems justified to view this rule as being of a general nature, i.e., to also be invoked in relation to those international agreements that do not themselves contain it. This approach supports the underlying purpose of international agreements that set out uniform rules to regulate international markets, which is to harmonize legal environments in different countries, and therefore to help remove legal barriers to international economic relations. The fact that the Russian Federation's international agreements are, in accordance with its Constitution, part of the nation's legal system does not alter the understanding (prevalent in private law theory) of the autonomous nature of an international agreement within the framework of the national legal system of which it is part. It follows from this autonomous nature that it is inadmissible to make subsidiary use of those domestic statutory provisions which run counter to any underlying principles of the international agreement. This yardstick should also be applied to explanations issued by the Supreme Court of the Russian Federation and the Russian Higher Court of Ar- bitration 2 on the procedure for courts in applying C.C.R.R provisions when the latter are used subsidiarily with respect to relations regulated by international agreements. The purpose of such explanations is not, and cannot be, to alter Russia's obligations under an international agreement. This is vividly seen in article 395 C.C.R.F. which defines the consequences of using another party's money with respect to relations regulated by the 1980 Vienna Convention. Under article 78 of the 1980 Vienna Convention, if one party fails to pay the price or any other sum that is in arrears, the other party is entitled to interest on it without prejudice to any claim for damages recoverable under article 74 of the 1980 Vienna Convention. Article 74 establishes the right to recover damages for breach of contract to the extent of both actual damages and lost profit. Since article 78 does not provide

" See e.g. the 1974 New York Convention, supra note 5, art. 7; the 1988 New York Convention, ibid., art. 4; the 1987 Guarantees, ibid, art. 5; the 1988 FinancialLeasing, ibid, art. 6(1); and the 1988 Factoring,ibid, art. 4(1). " In accordance with the Constitutionof the Russian Federation,the country's Supreme Court (article 126), and the Higher Arbitration Court (article 127) are empowered to issue explanations regarding issues of legal practice. Under the Federal law On the Arbitration Courts, Sobranie zakonodatelstva R.E (1995) No. 18, item 1589, art. 13(1), the right to provide some explanations is granted to the Plenum of the Higher Arbitration Court, and resolutions issued by the Plenum on matters within its jurisdiction are binding on courts of arbitration in the Russian Federation. 484 MCGILL LAW JOURNAL / REVUE DE DROITDEMCGILL [Vol. 44 any indication as to the procedure for determining the amount of interest, this gap is- by virtue of article 7(2) of the 1980 Vienna Convention-filledby courts invoking the applicable domestic law (i.e., article 395 C.C.R.F). This kind of subsidiary enforcement may not, and should not, result in a breach of the 1980 Vienna Convention. It is the Convention and not the C.C.R.F. that determines principles for applying rules on annualized interest. Further, it is necessary, pursuant to article 7(1) of the 1980 Vienna Convention, to give due regard for the need to achieve uniformity in the application of the Convention in different countries." In this vein, one should note that in international commercial exchange (which is also acknowledged in theory and foreign judicial and administrative practices), annualized interest is recovered regardless of whether there were any circumstances ex- cusing the defaulting party of liability for the payment delay. The lender should not, as a general rule, be required to prove the amount of damages incurred but only the validity of the rate applied to calculate the amount of interest. In the meantime, based on the location of article 395 C.C.R.E in Chapter 25: "Liability for Violation of Obli- gations," and under the subheading "Liability for Non-performance of a Monetary Obligation' the Russian Federation's Supreme Court of Arbitration treats the annualized interest stipulated by article 395 as a penalty, and orders the recovery to be ef- fected according to those rules which apply to property liability.

VIII. Correlation of International Agreements Where several international agreements have been concluded between the Rus- sian Federation and another country, a particular question then arises. In essence, which should enjoy priority when identifying rules to be applied in lieu of C.C.R.F provisions? It is obviously difficult to give an unequivocal answer to this question. It is imperative, first of all, to turn to the directions given by the international agreements themselves. Relative to international sales, the 1980 Vienna Convention expressly stipulates that it does not prevail over any international agreement which has already been, or may be, entered into and which contains provisions concerning matters governed by the Convention, provided that the parties have their commercial enterprises in countries that are parties to such an agreement. It follows that this is meant to refer to other international agreements that provide regulation on issues of substantive law. It should be noted that the 1980 Vienna Convention does not set any rules to govem the choice

" A court does not have the right, when trying cases, to apply those statutory provisions that govern any legal relationships if an international agreement which has taken effect for the Russian Federation and consent to the binding nature of which was given in the form of a Federal law establishes different rules than those set out in the law. In the author's opinion, this explanation should be understood more broadly than expressly stipulated. The constitutional precept regarding the prevalence of rules contained in the Russian Federation's international agreement extends to all types of such agreements. It is of decisive significance that such consent should be expressed by an authority provided for by law and in a form consistent with statutory requirements. 1999] M.G. ROZENBERG - THE C.C.R.F & INTERNATIONAL AGREEMENTS 485 of laws. Another example of such an international agreement is the Council for Mu- tual Economic Assistance's General Terms of Supply which, at the time the 1980 Vi- enna Convention was adopted and entered into force, had the status of an international agreement for signatory states. The applicable provisions of the 1986 Geneva Convention were set out earlier in this article?' A direct refusal to recognize the prevalence of the corresponding international agreement over other international agreements that have already been signed or may be signed is contained in particular in article 17 of the 1988 FinancialLeas- ing," and article 15 of the 1988 Factoring?"

IX. Reflection in the Civil Legislation of the Russian Federation of Provisions Sealed in International Agreements The law-making process of the U.S.S.R. and of the Russian Federation has tradi- tionally taken account of international practices in the regulation of civil law relations. This was reflected, in particular, in the Fundamentals,"7 effective in the Russian Fed- eration from August 3, 1992. The same method was used, to a much greater extent, during drafting work on Parts 1 and 2 of the C.C.R.F. As a result, a number of provisions which the C.C.R.F. institutionalizes are identical, or close in meaning, to the relevant provisions of certain international agreements. This has provided assurance that the C.C.R.F. is consistent with the present-day international practices of regulating property relations in a market economy. When the C.C.R.F. was drafted, due regard was given, most notably, to those international agreements to which Russia was party. Particular note was also taken of those international agreements drafted with Russia's participation, but which had yet to take effect. Other international documents of a universal nature were likewise given some consideration. The 1980 Vienna Convention should be singled out among such documents. Its provisions were used in varying degrees when formulating individual provisions in the C.C.R.F's section dealing with the law of obligations, as well as a large number of other provisions governing sales. Since the sole provisions set forth in the C.C.R.F. are also applied to contracts other than those of sale-i.e., contracts of exchange, contracts of hiring work, and trade credit contracts-the 1980 Vienna Convention has thus been influential in regulating these types of contracts too.

4 ' See Part IV, above. 35 Supra note 5. 6 Ibi 37Supranote 25. 486 MCGILL LAW JOURNAL / REVUE DE DROITDE MCGILL [Vol. 44

Account has been taken of approaches established by the 1974 New York Con- vention." In particular, provisions renunciating special shortened limitation periods in the area of product quality claims, as well as provisions invoking the statute of limita- tions at the debtor's request. The drafting of the C.C.R.F's provisions on contracts for financing against the cession of a pecuniary claim has taken account of principles set out in the 1988 Fac- toring," while the drafting of the C.C.R.F.'s provisions on financing leasing contracts proceeded with due regard to the 1988 FinancialLeasing.' The Air Code of the Russian Federation' which has been adopted in line with article 784(2) C.C.R.F., considers prescriptions given by the 1929 Warsaw Convention."' The Federal law On Copyright and Neighbouring Rights' includes the relevant provisions of the 1971 Berne Convention" and the 1971 Geneva Convention." The various Russian legislation on patents and trademarks reflect the relevant provisions of the 1883 ParisConvention."

Conclusion Few today can deny the importance of uniformity of rules in today's global com- munity, especially in the realm of international commerce. As the Russian Federation tries to find its place in a market economy, the importance that is placed on international agreements can only help to ease the transition. Yet the Russian Federation cannot lose sight of the importance of its domestic laws in this field. The challenge now is to achieve a sound balance between international and domestic rules and procedure that will further enhance business relations within the Federation and on the global scene.

,Supra note 5. 9 Ibid. ,0Ibid. 4'Sobranie zakonodatelstva RE (1997) No. 12, item 1383. 42 Supra note 3. 43Federal law No. 5351-1 of 9 July 1993.

"4 Supra note 4. Ibid. 46 ibid. 1999] M.G. ROZENBERG - THE C.C.R.F & INTERNATIONAL AGREEMENTS 487

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MadridAgreement Concerning the InternationalRegistration of Trademarks, 14 July 1967, 828 U.N.T.S. 389. Paris Convention for the Protection of Industrial Property, 20 March 1883, 74 U.K.F.S. 44. UNIDROIT Convention on InternationalFactoring, 28 May 1988, 27 I.L.M. 943. UNIDROIT Convention on InternationalFinancial Leasing, 28 May 1988, 27 I.L.M. 931. United Nations Convention on Contractsfor the InternationalSale of Goods, 11 April 1980, 1489 U.N.T.S. 3. United Nations Convention on Independent Guarantees and Stand-by Letters of Credit, UN GAOR, 50th Sess., UN Doc. A/50/640 (1987). United Nations Convention on International Bills of Exchange and International PromissoryNotes, 9 December 1988, 28 I.L.M. 170. Universal Copyright Convention, 6 September 1952, 216 U.N.T.S. 132. Universal Declaration of Human Rights, GA Res. 217(III), UNGAOR, 3d Sess., Supp. No. 13, UN Doc. A1810 (1948) 71. Vienna Convention on the Law of Treaties,23 May 1969, 1155 U.N.T.S. 331. Vienna Convention on the Law of Treaties Between States and InternationalOrgani- zations or Between InternationalOrganizations, 21 March 1986, 25 I.L.M. 543.

Articles Lunts, L.A., "Correlation Between International Contracts and Domestic State Laws in Civil and Labor Legislation" (1968) 14 Scientific Records of the National Research Institute of Soviet Law 223. Sukhanov, E.A., "Legal Nature of Interest Payable on Pecuniary Obligations" (1997) 1 Zakonodatelstvo Journal 8. Usenko, E.T., "Correlation and Interaction of International and National Law, and the Russian Constitution" (1995) 2 Moskovsky Zhumal Mezhdunarodnogo Pravda Jour- nal 246. Vitryansky, V.., "Interest on a Pecuniary Obligation as a Form of Liability" (1997) 8 Khozyaistvo i Pravo Journal 54.

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